UK Prime Minister Orders Security Review on Chinese Acquisition of UK’s Biggest Semiconductor Maker

July 9, 2021 Updated: July 9, 2021

UK Prime Minister Boris Johnson has ordered a security review of the purchase of the UK’s largest producer of semiconductors by a Chinese-owned firm after the acquisition was widely criticized by Members of Parliament (MPs).

Johnson said on July 7 that he has asked his national security adviser to probe into the purchase of Newport Wafer Fab (NWF) by Nexperia, a Dutch firm wholly owned by Chinese company Wingtech. The Welsh-based NWF produces chips used in technological products ranging from cellphones to cars. The company is specialized in the more advanced compound semiconductors, which is the key technology used in 5G networks and facial recognition software. It also has close research cooperation with British universities.

Wingtech, whose shareholders include Chinese state-funded investors, announced on July 5 that Nexperia has taken full ownership of NWF. Wingtech supplies chips to Chinese cellphone makers, including Huawei.

The purchase has triggered national security concerns by MPs across the political spectrum.

“Given the importance of semiconductors to our country’s critical infrastructure, there is a clear case to examine this on national security grounds,” said MP Ed Miliband, the shadow business secretary.

Tom Tugendhat, the chairman of the Foreign Affairs Committee, urged ministers to review the deal under the National Security and Investment Act.

Johnson told MPs on parliament’s liaison committee, “I think semiconductors are of huge importance to this country, and one of the things I wanted to look at immediately when I became prime minister was whether or not we could become more self-reliant.”

He added, “There is this company in Newport, we have to judge whether the stuff that they are making is of real intellectual property value and interest to China, whether there are real security implications, I have asked the National Security Adviser to look at it.”

According to the UK’s Enterprise Act, the government has 30 days for screening to decide if the deal will proceed or to put it under further review and even stop it for security reasons.

In 2020, the UK government decided to ban Chinese company Huawei from participating in the UK’s 5G network from 2027, due to concerns that the Chinese regime would use it for espionage and surveillance.

China doesn’t have the capability to make more advanced chips. The United States has banned the export of semiconductor technology to Chinese manufacturers out of national security concerns.